February 3, 2023
Good morning. In today’s either/view, we discuss whether the agricultural sector gets its due in the recent budget. We also look at the release of journalist Siddique Kappan from jail in Uttar Pradesh, among other news.
📰 FEATURE STORY
Budget 2023: What’s in store for the agricultural sector?
Arguably the most anticipated policy speech of the year, the budget is the government’s chance to clearly lay out its plans for the economy. Irrespective of the government in power, it’s a balancing act of giving everyone a fair piece of the pie. Invariably, not everyone will be 100% satisfied, but that comes with the territory.
One of the components of the budget is seeing what it does for farmers and the agriculture sector. While the government has hailed the budget as farmer-friendly with a boost to the sector, some experts and the opposition have criticised it for its shortcomings. So, where does the budget land concerning the agriculture sector?
Context
India is often referred to as an agrarian economy. To a large extent, that’s true. India is one of the biggest players in the agriculture sector worldwide. It’s the primary source of livelihood for about 58% of the country’s population. The sector in India has the second-largest agricultural land in the world.
The sector is projected to reach $24 billion by 2025. While domestic consumption is one aspect, exports play an equally important part. For example, in FY22, exports of rice were $6.12 billion. The government gains from the sector through land revenues. The agriculture sector has its hands in several other spheres of the economy. That’s why its part in the budget is closely scrutinised.
The pandemic hurt the sector. Per a NABARD survey, agriculture production in almost half of the districts sampled was affected. Access to credit through lending was affected in 89% of the districts surveyed. The disruption of the pandemic underlined the need for secure storage facilities. Also, there has been a long-standing demand from farmers for investment in the food processing sector.
When the BJP came into power in 2014, one of its goals was to double farmers’ income by 2022. That takes government spending. How much does the government spend on agriculture? There’s no straightforward answer here. Per the 2022-23 budget, the agriculture ministry’s annual spending was ₹1.33 lakh crores. However, total agricultural and allied spending was ₹1.55 lakh crores. Spending also includes subsidies, which don’t directly reach farmers but do benefit them.
Concerning spending, agriculture is technically under the state’s list in the constitution. Given the necessity for food security and the sector’s political implications, the Centre spends more on this sector than the states. In the aftermath of last year’s budget, there was some criticism that its vision was limited regarding the agricultural sector. However, the government made sure the allied sectors got a boost with a 73% spending increase in fisheries and a 26% increase in animal husbandry and dairy.
With the budget 2023 unveiled, how did it perform regarding the agriculture sector? Is it good news, or does the sector get the short end of the stick?
VIEW: It’s good news for farmers and the sector
This budget held particular significance and importance as it’s the last full budget before next year’s general elections. Broadly speaking, agriculture experts have given the budget high marks for being farmer-centric. There are provisions to boost high-value crops and allied sectors with a good budget outlay. Agritech is one sub-sector that has not gotten a lot of attention. However, the sector’s resilience during the pandemic has resulted in improved funding. The Digital Public Infrastructure for Agriculture will democratise the ecosystem.
The Agriculture Accelerator Fund will increase investment in agritech. For example, it can help bring innovations in packaged food to help boost farmer incomes. The fund will also increase the integration of agritech in the supply chain. There are about 63,000 primary agricultural cooperatives (PACs). The national cooperative database is a positive step that’ll help farmers get a better price for their produce.
One of the biggest announcements from the budget is the boost to natural farming. The budget stated the government would assist one crore farmers in transitioning to natural farming in the coming three years. The PM Program for restoration, awareness nourishment, and amelioration of mother earth (PM PRANAM) will incentivise states to promote alternative fertilisers.
Overall, the sector’s wishlist has been fulfilled. There’s a push towards green farming, taking note of climate change. The emphasis on agritech will help usher in much-needed innovative technologies that will help boost productivity and profitability for farmers.
COUNTERVIEW: It’s a letdown
To take a step back for a moment, the farming community and the government haven’t exactly been on the best of terms over the past year. The controversial farm laws continue to be a thorny issue for the government, despite being scrapped. Considering the sector was a saviour during the pandemic, the expectations were high, but the results didn’t match up.
When the government came into power in 2014, it promised to double farmers’ income by 2022. It hasn’t happened. Real wages are down, and the PM-KISAN isn’t sustainable. With this in mind, the budget proposed a 7% cut in allocation for the Department of Agriculture and Farmers Welfare (DAFW) compared to last year’s budget estimate. The Pradhan Mantri Fasal Bima Yojana (PMFBY) to protect farmers from weather vagaries has seen fewer allocations.
If India wants to ensure long-term food and nutritional security, there needs to be an increase in expenditure on agricultural research, education, and innovation by at least 1% of the agriculture GDP. However, data showed the Centre and the states combined spent less than half of this benchmark in FY2020. Spending on agriculture R&D is very low compared to developed and developing countries. For example, in Brazil, it’s 1.8%, and in China, it’s 0.62%.
Critical aspects like climate resilience and crop diversification plans, particularly moving away from wheat and paddy, continued to be largely ignored. Given the sector’s importance to the economy, it should’ve gotten greater attention and investment. The focus on populism has pushed the government and the budget away from real investments and bold reforms.
Reference Links:
- Agriculture in India: Information About Indian Agriculture & Its Importance – IBEF
- Impact Assessment of COVID-19 on Indian Agriculture and Rural Economy – NABARD
- A glimpse at how the Covid-19 pandemic has impacted the Agriculture sector – Times of India
- Importance of the Budget for agriculture sector – Hindustan Times
- Budget 2023: What’s In It For Farmers, Agritech Startups – Entrepreneur India
- Forward-looking budget that supports the farm sector – Free Press Journal
- Budget 2023 must set trajectory for farm growth in next decade: Experts – Moneycontrol
- Budget 2023: Cut in flagship farm schemes – New Indian Express
- Budget 2023: FM Sitharaman does well to hold back on revdis – but there is little for farmers to celebrate – Indian Express
What is your opinion on this?
(Only subscribers can participate in polls)
a) The 2023 Budget is good for farmers and the agriculture sector.
b) The 2023 Budget is bad for farmers and the agriculture sector.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
BJP’s Image Problem: Broken Promises, Drifting Flagships and Bahubalis Defying Modi’s Call
For the Left:
Proving John Kenneth Galbraith wrong
🇮🇳 STATE OF THE STATES
Siddique Kappan out on bail (Uttar Pradesh) – More than two years after his arrest over UAPA and PMLA, Kerala journalist Siddique Kappan walked out of the Lucknow district jail on bail. His release on Thursday came after a more than 5-week bureaucratic delay after securing bail on both counts on December 23. Siddique’s bail is contingent on the condition that he remain in New Delhi for six weeks and report to the Nizammudin police station every Monday. The journalist was arrested on October 5, 2020, while travelling to Hathras with three others.
Why it matters: The Hathras case brought to light a grave picture of gendered violence, caste atrocities, and the UP state’s collusion in burying the crime. The UP police registered multiple FIRs while the UP government raised sedition charges, among other things, against Kappan and three others. His arrest gained international attention and is noted as a testament to India’s declining press freedom. After his release, the journalist remarked that the UAPA is a political tool and that he has full faith in India’s judicial system.
Upper Bhadra Irrigation Project (Karnataka) – FM Nirmala Sitharaman allotted the flow of ₹5,300 crore into the Upper Bhadra Irrigation Project in poll-bound Karnataka. The project is expected to incur ₹21,450 crore. The project aims to irrigate nearly 2.25 lakh ha in the Chikkamagaluru, Chitradurga, Davangere, and Tumakuru districts with 19 tmcft of water. It also aims to fill up more than 350 tanks using 10.8 tmcft of water, along with increasing the capacity of the Vani Vilas reservoir.
Why it matters: Back in October 2022, CM Basavaraj Bommai announced that the irrigation project was likely to be approved for national status by the Cabinet, making it Karnataka’s first national-level scheme. Once completed, the project will ensure sustainable irrigation during the Kharif season. It will also facilitate recharging the groundwater table and diluting chemical contaminants in aquifers.
PVTG Development (Odisha) – With the highest number of Particularly Vulnerable Tribal Groups (PVTG), Odisha will benefit the most from the Pradhan Mantri PVTG Development Mission announced by FM Sitharaman during the budget. The program aims to supply the PVTG families and habitations with basic facilities like safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities.
Why it matters: Odisha is home to 13 PVTGs, the largest share in a state out of the 78 PVTGs in India. 2,49,609 people belonging to PVTGs live in 1,679 habitations across 14 districts of the state. Over the past decade, Odisha has handled several streamlined and holistic PVTG programmes that could swell its chances of being the best mover in this category.
Non-convertible debentures (Madhya Pradesh) – The Indore municipal corporation launched secured, redeemable NCDs with a face value of ₹1,000 each. The NCDs, aggregating to ₹122 crore, were issued with an option to allow an over-subscription of up to ₹122 crore, swelling its total size to ₹244 crore. They offer an 8.25% per annum rate of return and are payable half yearly. The NCDs will be available for four days between February 10 and 14.
Why it matters: NCDs are financial instruments that cannot be converted into shares or equities. Municipal corporations issue them for a specified period to raise long-term funds while awarding lenders a relatively higher rate of return than convertible debentures. Back in December 2022, the Indore MC became the first municipal body to tap the public issue market.
Seat-sharing formula (Tripura) – Ahead of assembly polls, the opposition Left Front parties, Congress and CPI(M), finalised their seat-sharing formula in a bid to defeat the BJP. The CPI(M) will contest 43 of the 47 seats allocated to the Left Front while withdrawing candidates from extra seats. The Congress is going to draw 4 out of its 17 fielded candidates. The Pradyot Kishore Debbarma-led TIPRA Motha, however, has withheld its alliance.
Why it matters: Determined to avoid a replay of the last poll and sweep a majority in Tripura’s 60 assembly constituencies, the Left-Cong camp has arrived at an understanding. Last month, the CPI(M) and Congress, with their supporters, took to the streets to highlight the incumbent BJP’s alleged attacks on 2,500 opposition members and supporters since 2015. While the seat-sharing understanding has seen a few ups and downs, the parties are finally in sync and hope to get the TIPRA Motha into their fold.
🔢 KEY NUMBER
$2.6 billion – The total amount loaned by the State Bank of India (SBI) to the Adani conglomerate- almost half of the officially permitted amount. It includes $200 million from the country’s largest financer’s overseas units.